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EXHIBIT 10.5
SUBSIDIARY GUARANTY
This GUARANTY (this "Guaranty"), dated as of January 28, 1999, is made
by each Subsidiary (as defined in the Credit Agreement referred to below)
signatory hereto on the date hereof and each other Subsidiary that may, from
time to time become, pursuant to the terms of the Credit Agreement and by
execution of a Supplement substantially in the form attached hereto as Annex I,
a party hereto (individually, a "Guarantor" and collectively, the "Guarantors"),
in favor of THE BANK OF NOVA SCOTIA, as lead arranger and administrative agent
(together with any successor(s) thereto in such capacity, the "Administrative
Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of January 28, 1999
(as amended, supplemented, amended and restated or otherwise modified from time
to time, the "Credit Agreement"), among New World Pasta Company, a Delaware
corporation (the "Borrower"), the various financial institutions as are, or may
from time to time become, parties thereto (the "Lenders"), the Co-Agents named
therein, Xxxxxx Xxxxxxx Senior Funding, Inc., as Syndication Agent, and The Bank
of Nova Scotia, as Lead Arranger and as Administrative Agent for the Lenders,
the Lenders have extended Commitments to make Credit Extensions to the Borrower;
WHEREAS, as a condition precedent to the making of each Credit
Extension (including the initial Credit Extension) under the Credit Agreement,
each Guarantor is required to execute and deliver this Guaranty;
WHEREAS, each Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of each Guarantor to execute this
Guaranty inasmuch as such Guarantor will derive substantial direct and indirect
benefits from the Credit Extensions made from time to time to the Borrower by
the Lenders and the Issuer pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in order to induce the Lenders to make each
Credit Extension (including the initial Credit Extension) to the Borrower
pursuant to
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the Credit Agreement, each Guarantor jointly and severally agrees, for the
benefit of each Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Certain Terms. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof):
"Administrative Agent" is defined in the preamble.
"Borrower" is defined in the first recital.
"Credit Agreement" is defined in the first recital.
"Guarantors" is defined in the preamble.
"Guaranty" is defined in the preamble.
"Lender Party" means, as the context may require, each Lender, the
Issuer, each Co-Agent and the Administrative Agent and each of their respective
successors and permitted transferees and assigns.
"Lenders" is defined in the first recital.
"Supplement" means a Supplement to this Subsidiary Guaranty Agreement
in the form attached hereto as Annex 1.
SECTION 1.2 Credit Agreement Definitions. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
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ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1 Guaranty. Each Guarantor hereby jointly and severally,
absolutely, unconditionally and irrevocably
(a) guarantees the full and punctual payment when due, whether
at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise, of all Obligations of the Borrower and each other
Obligor now or hereafter existing under the Credit Agreement, the Notes
any Letter of Credit and each other Loan Document to which the Borrower
or such other Obligor is or may become a party (or, in the case of
Letters of Credit, is or may become the account party), whether for
principal, interest, Reimbursement Obligations, fees, expenses or
otherwise (including all such amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of
Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11
U.S.C. Section 502(b) and Section 506(b)), and
(b) indemnifies and holds harmless each Lender Party and each
holder of a Note for any and all costs and expenses (including
reasonable attorney's fees and expenses) incurred by such Lender Party
or such holder, as the case may be, in enforcing any rights under this
Guaranty;
provided, however, that each Guarantor shall be liable under this Guaranty only
for the maximum amount of such liability that can be hereby incurred without
rendering this Guaranty, as it relates to such Guarantor, voidable under
applicable law relating to fraudulent conveyance or fraudulent transfer, and not
for any greater amount. This Guaranty constitutes a guaranty of payment when due
and not of collection, and each Guarantor specifically agrees that it shall not
be necessary or required that any Lender Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy whatsoever
against the Borrower or any other Obligor (or any other Person) before or as a
condition to the obligations of such Guarantor hereunder. Each Guarantor
acknowledges and agrees that each obligation hereunder shall be a joint and
several obligation of such Guarantor.
SECTION 2.2 Acceleration of Guaranty. Each Guarantor agrees that, in
the event of the dissolution or insolvency of the Borrower, any other Obligor or
any Guarantor, or the inability or failure of the Borrower, any other Obligor or
any
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Guarantor to pay debts as they become due, or an assignment by the Borrower, any
other Obligor or any Guarantor for the benefit of creditors, or the commencement
of any case or proceeding in respect of the Borrower, any other Obligor or any
Guarantor under any bankruptcy, insolvency or similar laws, and if such event
shall occur at a time when any of the Obligations of the Borrower and each other
Obligor may not then be due and payable, each Guarantor jointly and severally
agrees that it will pay to the Lenders forthwith the full amount which would be
payable hereunder by such Guarantor if all such Obligations were then due and
payable.
SECTION 2.3 Guaranty Absolute, etc. This Guaranty shall in all respects
be a continuing, absolute, unconditional and irrevocable guaranty of payment,
and shall remain in full force and effect until all Obligations of the Borrower
and each other Obligor have been paid in full, all Letters of Credit have been
terminated or expired, all obligations of each Guarantor hereunder shall have
been paid in full and all Commitments shall have terminated. The liability of
each Guarantor under this Guaranty shall be joint and several, and shall be
absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the
Credit Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note
(i) to assert any claim or demand or to enforce any
right or remedy against the Borrower, any other Obligor or any
other Person (including any other guarantor (including any
Guarantor)) under the provisions of the Credit Agreement, any
Note, any other Loan Document or otherwise, or
(ii) to exercise any right or remedy against any
other guarantor (including any Guarantor) of, or collateral
securing, any Obligations of the Borrower or any other
Obligor;
(c) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower or
any other Obligor, or any other extension, compromise or renewal of any
Obligation of the Borrower or any other Obligor;
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(d) any reduction, limitation, impairment or termination of
any Obligations of the Borrower or any other Obligor for any reason,
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and each Guarantor hereby
waives any right to or claim of) any defense or setoff, counterclaim,
recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability
of, or any other event or occurrence affecting, any Obligations of the
Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other
modification of, or any consent to departure from, any of the terms of
the Credit Agreement, any Note or any other Loan Document;
(f) any addition, exchange, release, surrender or
non-perfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any other
guaranty, held by any Lender Party or any holder of any Note securing
any of the Obligations of the Borrower or any other Obligor; or
(g) any other circumstance which might otherwise constitute a
defense other than subject to Section 2.4 the defense of payment in
full of the Obligations of the Borrower available to, or a legal or
equitable discharge of, the Borrower, any other Obligor, any surety or
any guarantor.
SECTION 2.4 Reinstatement, etc. Each Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party or any holder of any
Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5 Waiver, etc. Each Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Administrative Agent, any other Lender Party or any holder
of any Note protect, secure, perfect or insure any security interest or Lien, or
any property subject thereto, or exhaust any right or take any action against
the Borrower, any other Obligor or any other person (including any other
guarantor) or entity or any collateral securing the Obligations of the Borrower
or any other Obligor, as the case may be.
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SECTION 2.6 Postponement of Subrogation. Each Guarantor agrees that it
will not exercise any rights which it may acquire by way of subrogation under
this Guaranty, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Obligations of the Borrower and each other
Obligor. Any amount paid to such Guarantor on account of any subrogation rights
prior to the payment in full of all Obligations of the Borrower and each other
Obligor shall be held in trust for the benefit of the Lender Parties and each
holder of a Note and shall immediately be paid to the Lender Parties and each
holder of a Note and credited and applied against the Obligations of a Borrower
and each other Obligor, whether matured or unmatured, in accordance with the
terms of the Credit Agreement; provided, however, that if
(a) such Guarantor has made payment to the Lender Parties and
each holder of a Note of all or any part of the Obligations of the
Borrower or any other Obligor, and
(b) all Obligations of the Borrower and each other Obligor
have been paid in full and all Commitments have been permanently
terminated,
each Lender Party and each holder of a Note agrees that, at such Guarantor's
request, the Lender Parties and the holders of the Notes, will execute and
deliver to such Guarantor appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
such Guarantor of an interest in the Obligations of the Borrower and each other
Obligor resulting from such payment by such Guarantor. In furtherance of the
foregoing, for so long as any Obligations or Commitments remain outstanding,
each Guarantor shall refrain from taking any action or commencing any proceeding
against the Borrower or any other Obligor (or its successors or assigns, whether
in connection with a bankruptcy proceeding or otherwise) to recover any amounts
in the respect of payments made under this Guaranty to any Lender Party or any
holder of a Note.
SECTION 2.7 Successors, Transferees and Assigns; Transfers of Notes,
etc. This Guaranty shall:
(a) be binding upon each Guarantor, and each Guarantor's
successors, transferees and assigns; and
(b) inure to the benefit of and be enforceable by the
Administrative Agent and each other Lender Party.
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Without limiting the generality of the foregoing clause (b), any Lender may
assign or otherwise transfer (in whole or in part) any Note or Credit Extension
held by it to any other Person or entity, and such other Person or entity shall
thereupon become vested with all rights and benefits in respect thereof granted
to such Lender under any Loan Document (including this Guaranty) or otherwise,
subject, however, to any contrary provisions of Section 10.11 and Article IX of
the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties. Each Guarantor hereby
represents and warrants to each Lender Party that the representations and
warranties contained in Article VI of the Credit Agreement, insofar as the
representations and warranties contained therein relate to such Guarantor and
its properties, are true and correct in all material respects, each such
representation and warranty set forth in such Article (insofar as applicable as
aforesaid) and all other terms of the Credit Agreement to which reference is
made therein, together with all related definitions and ancillary provisions,
being hereby incorporated into this Guaranty by reference as though specifically
set forth in this Section.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1 Covenants. Each Guarantor covenants and agrees that, so
long as any portion of the Obligations shall remain unpaid, any Letters of
Credit shall be outstanding or any Lender shall have any outstanding Commitment,
such Guarantor will, unless the Required Lenders shall otherwise consent in
writing, perform, comply with and be bound by all of the agreements, covenants
and obligations contained in Article VII of the Credit Agreement which are
applicable to such Guarantor or its properties, each such agreement, covenant
and obligation contained in such Article and all other terms of the Credit
Agreement to which reference is made herein, together with all related
definitions and ancillary provisions, being hereby incorporated into this
Guaranty by reference as though specifically set forth in this Section.
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ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1 Loan Document. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly indicated
herein) be construed, administered and applied in accordance with the terms and
provisions thereof.
SECTION 5.2 Binding on Successors, Transferees and Assigns; Assignment.
In addition to, and not in limitation of, Section 2.7, this Guaranty shall be
binding upon each Guarantor and its successors, transferees and assigns and
shall inure to the benefit of and be enforceable by each Lender Party and each
holder of a Note and their respective successors and permitted transferees and
assigns (to the full extent provided pursuant to Section 2.7); provided,
however, that no Guarantor may assign any of its obligations hereunder without
the prior written consent of all Lenders; provided further that upon the
transfer, sale or other disposition of all of the Capital Stock of any Guarantor
in accordance with the terms of the Credit Agreement (other than to the Borrower
or another Guarantor), such Guarantor will automatically be released from its
obligations hereunder. At the sole expense of the Borrower, the Administrative
Agent will deliver any documents reasonably requested by the Borrower to
evidence such release.
SECTION 5.3 Amendments, etc. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by any Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Administrative Agent (on behalf of the Lenders or the Required Lenders, as the
case may be) and the Guarantors (other than with respect to a consent or waiver)
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 5.4 Addresses for Notices to Each Guarantor. All notices and
other communications provided to each Guarantor under this Guaranty shall be in
writing or by facsimile and addressed, delivered or transmitted to such
Guarantor at its address or facsimile number set forth opposite its name on
Schedule I hereto or at such other address or facsimile number as may be
designated by such Guarantor in a notice to the other parties. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by pre-paid courier service, shall be deemed given when received; any
notice, if transmitted by facsimile, shall be deemed given when transmitted.
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SECTION 5.5 No Waiver; Remedies. In addition to, and not in limitation
of, Section 2.3 and Section 2.5, no failure on the part of any Lender Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 5.6 Section Captions. Section captions used in this Guaranty
are for convenience of reference only, and shall not affect the construction of
this Guaranty.
SECTION 5.7 Setoff. In addition to, and not in limitation of, any
rights of any Lender Party or any holder of a Note under applicable law, each
Lender Party and each such holder shall, upon the occurrence of any Event of
Default described in any of clauses (a) through (d) of Section 8.1.9 of the
Credit Agreement or, with the consent of the Required Lenders, any Event of
Default, have the right to appropriate and apply to the payment of the
obligations of each Guarantor owing to it hereunder, whether or not then due,
and each Guarantor hereby grants to each Lender Party and each such holder a
continuing security interest in, any and all balances, credits, deposits,
accounts or moneys of such Guarantor then or thereafter maintained with such
Lender Party or such holder and any and all property of every kind or
description of or in the name of such Guarantor now or hereafter, for any reason
or purpose whatsoever, in the possession or control of, or in transit to, such
Lender Party, such holder or any agent or bailee for such Lender Party or such
holder; provided, however, that any such appropriation and application shall be
subject to the provisions of Section 4.8 of the Credit Agreement.
SECTION 5.8 Severability. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provisions or the remaining provisions of this Guaranty.
SECTION 5.9 Governing Law, Entire Agreement, etc. THIS GUARANTY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE
OF NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
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ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER
HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
SECTION 5.10 Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR ANY GUARANTOR MAY BE BROUGHT AND
MAINTAINED IN THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; EACH
GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, NEW YORK COUNTY AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE. EACH GUARANTOR HEREBY
EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY
SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 5.11 Waiver of Jury Trial. EACH GUARANTOR AND THE
ADMINISTRATIVE AGENT HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON,
OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
THE LENDER PARTIES OR ANY GUARANTOR. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT
IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT
THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
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SECTION 5.12 Additional Guarantors Certain Subsidiaries of the Borrower
may after the date hereof be required to enter into this Guaranty as Guarantor.
Upon execution and delivery, after the date hereof, by the Administrative Agent
and such Subsidiary, of an instrument in the form of Annex I, such Subsidiary
shall become a Guarantor hereunder with the same force and effect as if
originally named as a Guarantor hereunder. The execution and delivery of such
instrument shall not require the consent of any other Guarantor or Lender
hereunder.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its officers thereunto duly authorized as of the day
and year first above written.
WINCHESTER PASTA L.L.C
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Vice President, Finance,
and Chief Financial
Officer
PASTA GROUP, L.L.C.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Vice President, Finance,
and Chief Financial
Officer
THE BANK OF NOVA SCOTIA
as Administrative Agent
By /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Senior Relationship
Manager
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